Lawsuits are being filed against banks, financial institutions and third-party debt collectors, alleging consumers are being illegally harassed - sometimes for debts that are not even theirs. And one state now accuses a debt collector of adding illegal fees to the amount they have attempted to collect.
Star Tribune reports that Minnesota Attorney General Lori Swanson filed a lawsuit against Bradstreet & Associates LLC, alleging the company added illegal interest on old debts. In one case, the illegal interest resulted in a debt of approximately $1,800 jumping to more than $4,100. A different consumer said her debt jumped from $250 to more than $4,300 by the time Bradstreet began attempting to collect on it.
Bradstreet was reportedly attempting to collect on old bank overdrafts and fees owed to Wells Fargo and US Bank, but contracts the consumers had with the banks did not allow interest to be charged on overdraft or overdraft fees. Bradstreet allegedly added up to 21.75 percent interest on the owed amounts. Under Minnesota law, unless the customer has signed a contract authorizing a higher interest rate, interest rates are capped at six percent.
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Meanwhile, JP Morgan Chase reportedly faces a lawsuit regarding its own debt collection practices. According to The Wall Street Journal (12/17/13), Mississippi Attorney General Jim Hood filed a lawsuit against JP Morgan, alleging the company illegally targeted Mississippi consumers for late credit card debt that the consumers either did not owe or that had already been paid. Furthermore, the bank allegedly harassed consumers over a debt that was paid in full. In 2013, California also filed a lawsuit against JP Morgan Chase for its debt collection practices.